Good morning, ladies and gentlemen, and welcome to the Ziopharm Oncology Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Chris Taylor, Vice President of Investor Relations and Corporate Communications. Sir, you may begin.

Thank you, Bridget, good morning and welcome to the Ziopharm Oncology conference call and webcast to review results for the second quarter of 2019. This morning, we filed our 10-Q and issued our Q2 news release, both of which are available in the Investors Section of our website, ziopharm.com. During this call, the company will make a number of forward-looking statements including statements regarding the potential therapeutic candidates in our development pipeline, regulatory status, financial information and business trends. Forward-looking statements are subject to numerous risks and uncertainties, as described in our 10-Q and within other filings that we may make with the SEC from time-to-time. Following commentary from Ziopharm’s management team, we will open the call for Q&A. In the interest of time and to allow all to ask questions, please ask one question and a follow-up and then feel free to return to the queue. Thank you. Leading our call today is Dr. Laurence Cooper, Chief Executive Officer of Ziopharm. Good morning, Laurence.

Hey. Thanks, Chris, and good morning to everyone joining us on the call. We had a tremendous second quarter at Ziopharm and update the efforts that built value for our company and its shareholders. We will work to continue this momentum and have a clear road in front of us as we build a leading immunotherapy company. Impart, these milestones are attained and value created by having first rates experienced and driven colleagues and the Ziopharm team we are assembling along with our Board of Directors is excellent. Today, we are pleased to introduce you to two of the newest members of Ziopharm’s management team, Chief Financial Officer, Sath Shukla and the Director of our TCR program, Dr. Drew Deniger. We are delighted to have them aboard and even though they’ve only been with us officially for a couple of weeks, we are pleased that you will hear from them directly today. Additionally, we want to extend a special welcome to Heidi Hagen, a biotechnology executive who joined our Board of Directors in June. Heidi’s extensive knowledge in drug development and operations management at Immunex and Dendreon, her entrepreneurial experience as Co-Founder and Chief Strategy Officer of Vineti, as well as her leadership and strategy skills will greatly benefit Ziopharm. This appointment represents the fifth new Board Member for Ziopharm in the past year and we have one remaining seat that we look forward to filling soon. And with those introductions, I’d like to turn the call over to Dr. David Mauney, Ziopharm’s President for some highlights of the second quarter. David?

Yes, thanks, Laurence and good morning to everyone joining us on the call. Let me start by saying that we have made significant and very meaningful advancements in literally every aspect of our business since our last call. First, in terms of strengthening our management team, we said throughout the year that we are working to build out our team in meaningful ways and we are incredibly proud to welcome Sath and Drew to Ziopharm and pleased to have them introduce themselves to you today. I will introduce Sath in a few moments, and I think you will agree that with his background, he is a tremendous addition. And while Laurence will introduce Drew later, I can tell you I’ve gotten to know Drew myself over the last year and of course he brings world-class scientific acumen to our team, but he is also a great person and his commitment to us is tangible and easily measured by his willingness not only to depart the NCI, but also in his agreement to relocate his family to Houston which is clearly becoming a geographic epicenter to our TCR-T efforts. I would be remised I also didn’t mention the additional headcounts we have added in a variety of roles throughout our Houston and Boston facilities. The sum result is we now enjoy an excellent core team and we’ll continue to build it out over the months and years to come. Second, regarding the financial strength of the company, we often express how grateful we are that Ziopharm has such a strong and supportive shareholder base. Last week, that support was in full view when we announced that a group of our investors led by MSD Partners had entered into an agreement to exercise existing warrants far ahead of their expiration date providing…

Thank you, David. Hello to everyone on the line. I know that there are many on the call whom I have worked within the past and many others I look forward to speaking with and meeting in the quarters ahead. I am truly delighted to join the team at such an important time in Ziopharm’s history and I am very excited by the growth prospects for our company. In my own due diligence, I became convinced that Ziopharm is now well positioned to achieve its objective of bringing transformative immunotherapies to the market. The signs are compelling and with strengthened talent and financial resources, the management team is laser-focused on executing a strategic plan to advance therapies for patients and create value for the company and our investors. Now, turning to the financial results for Ziopharm’s second quarter of 2019. Net loss for the quarter was $14.6 million, or $0.09 per share, compared to a net loss of $17.5 million, or $0.12 per share, for the second quarter of 2018. The decrease in net loss resulted primarily from the elimination of approximately $5.5 million of dividends to preferred shareholders caused by the cancellation of preferred stock in October 2018. Research and development expenses were $10 million for Q2 of 2019, compared to $7.5 million for Q2 of last year. The increase was primarily due to milestone payments under our patent license agreement with the NCI and increased non-clinical R&D to support our Cell Therapy programs. G&A expenses were $4.8 million for the second quarter of 2019, slightly below the $4.9 million for the second quarter of 2018. The company ended the quarter with unrestricted cash resources of approximately $43.6 million. This is the primary funding source for our Controlled IL-12 platform, our work with the NCI, as well as the G&A support for our business. As a reminder, we also had a prepayment balance of approximately $24.2 million at the end of Q2 for clinical and pre-clinical work to be conducted by the company at MD Anderson Cancer Center under the current CD19 Research and Development Agreement. And as David mentioned, just last week we announced that the company raised approximately $25 million through the exercise of existing warrants. We believe that these aggregate liquid resources of more than $100 million will be sufficient to fund planned operations and execute our strategy into 2021 and allow for visibility into key clinical data readouts for each of our core programs. This encapsulates our forward-looking financial management strategy. To prioritize and enable our R&D efforts, while staying disciplined on our G&A OpEx ensuring optimal capital allocation. In summary, I am excited to be here and I look forward to getting to know many of you in the months and years to come as we build a truly great company. Over to you Laurence.

Thank you, Sath. It’s wonderful to have you on Board. Reflecting on the list of recent milestones the news items we have made considerable progress on both the Sleeping Beauty and Controlled IL-12 platforms. Operationally, we have important new additions to the team and now enjoy a significantly strengthened balance sheet. It was certainly a busy first half of the year for Ziopharm and the pace does not appear to be slowing at all as we look ahead. As the year progresses, we are sharing our vision in greater detail for the future of Ziopharm with the investment community. In broad terms, Ziopharm aims to be a leading developer of immunotherapies to target cancers by harnessing the power of our two platforms, Sleeping Beauty and Controlled IL-12, along with the associated three programs. Let me start with the TCR-T program. One of the most exciting areas in immunotherapy is built on the use of the T-cell receptors or TCRs to target neoantigens for the treatment of solid tumors. The leading cause of cancer deaths in the United States and a major opportunity for us globally. We refer to the infusion of T-cells expressing introduce TCRs as “TCR-T”. Ziopharm is developing a solution for TCR-T using the Sleeping Beauty system, which we believe is the most clinically advanced, non-viral gene therapy platform and enables the production of clinical-grade T-cells expressing neoantigen-specific TCRs. The simplicity and elegance of this non-viral gene transfer technology sets us apart from the complexity and cost of genetically modifying TCR-T cells with virus. We are emerging as a leader in a non-viral manufactured genetically modified T-Cell and as Drew will highlight, we have years of knowhow in generating TCRs to neoantigens. We believe this expertise, along with our recently licensed IP creates barriers to entry for our…

Thank you, Laurence for the generous introduction and kind words. Good morning everyone. I am thrilled to be joining Ziopharm in such an important time in the company’s history. As Laurence noted, evaluating and validating the Sleeping Beauty platform has been a research priority during my six years of work directly with Dr. Rosenberg at the NCI. It is clear to me that utilizing the Sleeping Beauty genetically modified T-cells as a compelling path to treat - treating solid tumors and I am excited to be able to join Laurence, Ellee and the Ziopharm team as we advance TCR-T into the clinic with two important shots on goal. First, Ziopharm is planning a trial that can broadly enroll recipients with multiple types of tumors as the TCR is targeting multiple neoantigens are made from and for the patient, similar to our experience targeting patient-specific neoantigens with TCR modified T-cells at the NCI. Second, is a TCR-T trial referred to as from a donor for multiple patients treating with the library of TCRs that target shared neoantigen hotspots. Thus, I will lead our efforts to expand the library of TCRs reactive to neoantigens with commonly mutated cancer genes including KRAS, P53 and EGFR. I participated in growing the hotspot library, TCR library at the NCI and Ziopharm’s broad license with the NCI gives the company a very powerful and differentiating starting point. The initiation of the NCI trial is eminent. This trial is a culmination of several years of work for Laurence, Dr. Rosenberg and me, as well as a large group of supportive people at NCI and Ziopharm. The NCI is completing the necessary final internal steps to activate the trial. As the final NCI boxes are being shut, we stand ready to execute on our own efforts to replicate…

Thank you, Drew. We appreciate you sharing your experience and perspectives. It is fantastic to have you here at Ziopharm. We would like to you drop from the call, so that you can get back to the team in Houston. In summary, the advancements and additions we have made to our TCR-T program underscores the prominent role Ziopharm expects to play in this evolving space. We are working with the right team with Dr. Rosenberg at the NCI and Drew and colleagues here at Ziopharm and we are targeting the right targets neoantigens inside and outside hotspots with the right tool, the Sleeping Beauty system to genetically modify patient-derived T-cells. Combined, this creates two compelling clinical paths or two shots on goal for Ziopharm to pursue in the future. I will now touch upon our other two programs. Let me turn to the CAR-T program. Our second program also built on the Sleeping Beauty platform is the Rapid Personalized Manufacturer or as we refer to as RPM of CD-19 specific CAR-T which we are advancing in collaboration with MD Anderson cancer center in the United States and through our joint venture, Eden BioCell for Greater China. The technology associated with Rapid Personalized Manufacturer is designed to generate CAR-T within two days of gene transfer. We reiterate our plan to commence a third-generation Phase 1 trial for rapid personalized manufacturer of Sleeping Beauty CD-19 specific CAR-T with membrane bound IL-15 later this year with colleagues at MD Anderson. With independence from our former partner, we set two challenges for ourselves. The first was to improve the manufacturing process and the second was to evaluate the CAR-T space for unrecognized needs from a clinical and perhaps competitive viewpoint. Let me now share with you the three learnings from these past ten months.…

[Operator Instructions] Our first question is from David Novak with Raymond James. Your line is open.

Good morning. Thanks for taking my questions and congratulations on the outstanding progress in the quarter. So, two questions from me. Starting with the third-generation CAR-T program, could you update us as to where the Houston engineers currently are in terms of viable, non-viable cell ratio? And maybe a bit of color into what type of protocol tweaks have been are being implemented to drive higher viability?

Yes, thanks very much. So, the question around really what process development and the goal post of achieving 70% viability, as you and the listeners on this call know, that was one of the major feedbacks from the FDA regarding the whole – for this clinical trial. My comments today were really designed to give a reassurance that that 70% benchmark can be achieved. So, this is really what we’ve been working on in a lot over these past months, essentially since we reshaped our relationship with our former partner. And it really involves an engineering solution that the team in Houston have executed on. I don’t want to go into too many details for obvious issues of competitive intelligence, but suffice to say, it is both elegant and within the conscience of the rapid personalized manufacturing process. So it could be readily accomplished within the two days that we designed for this procedure.

Excellent. And just for a follow-up, maybe moving on to the controlled IL-12 program, I think the highest OPDIVO dose we’ve seen to-date is 3 mgs per kg q2w if I remember correctly, in the – starting dose with Libtayo is 315 mg, q3w. Could you just walk me through the rationale and establishing the starting dose of Libtayo versus the max dose tested in the Phase 1 combo with OPDIVO?

Yes. Thank you for the question. And it’s actually very good that – to clarify this. So, the Phase 1 study with OPDIVO accomplished several goals. The first was – for the first time, IL-12 was combined with an immune checkpoint inhibitor and targeting PD1 for patients with brain tumor. That learning was accomplished by series of cohorts in which the IL-12 dosing and the PD1 or OPDIVO dosing were stepped up. We announced that essentially we have achieve maximal dosing for both the IL-12 and the OPDIVO and now we are expanding that study. So, that playbook if you would for the Phase 1 trial gave us the insight, the maximal dosing of PD1 inhibitor was safe. We then translated that data into the Phase 2 trial with Regeneron’s asset LIBTAYO. We now can enroll to a Phase 2 trial without having to do this step function, because we can give essentially the maximum dose of the LIBTAYO with what we also know to be the maximum dose that appears to be efficacious of IL-12. So, in sum, the Phase 2 trial really builds up the Phase 1 trial, because LIBTAYO comes in at that maximum dosing.

Got you. Perfect. Well, thank you very much for the color and congrats again on the progress and I’ll drop back in the queue.

Thanks.

Thank you. And our next question is from Thomas Flaten with Lake Street Capital. Your line is open.

Thank you. Good morning. Just to follow-up on the question about the CAR-T program. Can you give us some color on the ongoing discussions with FDA and the timing of resolution of the hold?

Yes. Thank you. We have prioritized the allogenic trial over the autologous trial. So let me just walk through that terminology. We see white space for patients who relapse after allogenic bone marrow transplantation who had CD-19 specific allergies. That is to be frank, a death sentence for those patients. But it’s a real opportunity now for Ziopharm because with our rapid manufacturing process, we can infuse donor-derived T-cells in that context and as I mentioned in my prepared remarks, ancillary questions could be answered around lympho depletion and relapse rates. The playbook if you would for that is based on dialogue with the regulators. The guidance that we will submit a new IND and that’s an important part of the puzzle, but it should not disturb the investor base, because it doesn’t disrupt our timelines. As we have said all along, we will be in the clinic with this program. We will initiate a trial in this program this year. The hold issues associated with the autologous CAR-T really allows to know what the FDA needs to hear in this new IND. So, all the process developments that we have done in the autologous trial if you would is being applied to this new IND, hence I can get essentially confidence about the timelines. Let me just add one other, I think, framing statement. One quarter ago, Ziopharm had one shot on goal for TCR program, that was really from the patient and for the patient. And one shot on goal in the CAR-T program and that was the autologous CAR-T therapy. By one quarter later, this quarter, we have now essentially given two shots on goal for both of those programs. In the TCR-T program, we have – from the patient, for the patient and from a donor for multiple patients, that’s the hotspot trial. And in the CAR-T program, we’ve expanded essentially beyond the autologous cell therapy setting to now include its allogenic cell therapy program which we think will be I think special to our technology.

That’s great. And to confirm the allogenic study, will that be done in collaboration with MD Anderson as well, or is that separate from the agreement you have with them?

No, that’s within the compliance of the agreement at MD Anderson.

Got it. Thank you. I’ll get back in the queue.

And our next question comes from the line of I-Eh Jen with Laidlaw. Your line is open.

Good morning and thanks for taking the questions and congrats for all the advancements. I have two questions basically, so far related to ASP. First one is for the TCR-T program and the NCI. Could you give us little bit more color regarding what might be the activity over the next 12 months in terms of the study, Phase 1 study? And also, how would you guys prioritize between the hotspots and individual or de novo neoantigens, was that based on patient indication? Or any other criteria?

That is a great question, I-Eh. Thank you. So in terms of the NCI activity over the next 12 months, the investor base who were really good benchmarking us on the clinical trial data. That’s obviously where we are heading and that we expect to be able to share in the next 12 months. It’s a process. It starts essentially with Drew. All his fine work. It then bubbles up through the IND, regulatory gates that we’ve now passed. It’s been executing on that IND, the NCI going through essential their internal processes and then it’s beginning the trial, this for the patient, from the patient, identifying the neoantigens, identifying the TCRs and manufacturing the process. This is what the NCI is superb at. So, as essentially this engine engages with our Sleeping Beauty system over the next 12 months, you will start seeing the data pumps out from the NCI. And of course, those learnings will then translate into Ziopharm’s activities as we build out our own internal programs. So let me transition now to your other question which is also very perceptive and that is, how will Ziopharm manage essentially or prioritize between the two trials, from the patient, for the patient, that idea that we are harvesting the patients’ own TCRs and delivering them back against a suite of targets and then the hotspot trial from a donor for multiple patients in which patients are being screened and then libraries are being extracted from the shelves to make their product. That’s essentially two opportunities can run in parallel and given the number of patients quite frankly with solid tumors, there is easily enough demand for both of those trials. However, there is also opportunity for patients to naturally progress through essentially the two trial designs. Imagine for instance a patient who comes in tomorrow into Ziopharm, he or she to be screened essentially and the TCRs to be identified, but at the same time, we could also look to see if they have a hotspot mutation and we have a TCR on the shelf. So we can make a decision really in the patient’s best interest. Do they have a hotspot TCR, if so, boom. They got right on the trial. Or are they part of the broader population for which they don’t have a TCR in that library and then we have essentially their requisite and quite frankly, preeminent technology to develop their own T-cell receptors for that particular patient.

Okay, great. Thanks a lot. I have one more – one follow-up question , which actually came from investors. This is related to the CAR-T studies in Houston. And you would like it, I know you mentioned about a 70% threshold by the FDA. The question is, how could you ensure the consistency and the reproducibility of the way you try to achieve that? And also, by achieving that, could that potentially have any other adverse sort of lot of patients which will be impacting other aspects of the CAR-T?

Yes, that’s a really good question, as well. So, just in case, there is some difficulty on the line, I’ll repeat it back for the audience, so, I-Eh’s question really went around the consistency at the process to achieve that 70% benchmark with respect to the production of the CAR-T. So, one solution is, we’ve repeated this a lot of times, and that’s really you know, what’s expected I think of a first-class drug developer. So we have set a data that allows us to essentially have a confidence into both around that 70% benchmark. But there is also underlying sophistication is your question, and that is around the heterogeneity of patients. I mean, sitting around this room, people look different and that’s not just their outside appearance, but inside they are different. In other words, people have different types of T-cells in terms of quality, and quantity. But Ziopharm is soul for that, because the first is, by having a very rapid manufacturing process, you’ve essentially limiting the variability that’s introduced during the growth of the T-cells. Other companies, for instance, viral producing, viral using companies have a pretty lengthy production process and variability creeps in during those days to weeks to manufacture. And the second way, essentially to smooth out the heterogeneity between people is the use of IL-15. This is such a powerful signal for T-cells to go and grow. If patients have for instance, poor quality T-cells, that IL-15 heals that and allows those T-cells essentially then to execute their function inside the body.

Okay, great. That’s very, very helpful. And again, congrats on the progress at multiple fronts.

Thank you.

And our final question is from Sean Lee with H.C. Wainwright. Your line is open.

Good morning guys. And thank you for taking my questions. My first question is on the controlled IL-12 program. Could you give us some estimates on the expected timelines for the currently enrolling cohorts? When do you expect them could be fully enrolled? And when can we see some updates on the results?

Yes, thanks very much, Sean. So, the expansion study, which is that monotherapy study, really designed to drill in on what we think is the optimum dose of veledimex 20 milligrams with the right environment, in other words, low-dose steroids. That expansion cohort is already approved. And we did it very rapidly and we now have those additional 36 or so patients that we are added to the prior Phase 1 dataset and that’s now maturing and we will start to see that data towards the end of the year as I indicated Society of Neuro-Oncology would be one byte of that data and then into next year. The two combination trial, the first being a Phase 1 trial with OPDIVO and the second being the Phase 2 trial with LIBTAYO, those trials are both running in parallel but they are slightly different, because the Phase 1 trial with OPDIVO essentially had completed its dosing when achieved the maximum dose level, but we had demand for that trial and put on an additional about 12 patients. So, we will have essentially an oversubscribed dataset that will again readout the initial byte being around Society of Neuro-Oncology November of this year and then into next year. And then lastly, the combination trial with cemiplimab or LIBTAYO, that’s a Phase 2 trial we’ve just announced today around the enrollment. David made that announcement in his prepared remarks. So we are accruing and quite frankly, given the – excuse me, given the patients and the providers’ enthusiasm, it really should go very briskly. I would think it will be done roughly by the end of this year. So, you’ll start to see that clinical data then percolate out in 2020.

I think also this is a good example, a good question to demonstrate the importance of the financing we just closed and the idea that our datasets in all three programs will provide us a maturity level that we think will be value creating. So, if you assume that we would have the potential to have all of our patients enrolled during the calendar year this year, and then you secondarily assume that any follow-up greater than nine months is meaningful in the rGBM space. The dataset in 2020 would be extremely powerful for us for the IL-12 program.

Great. Thank you for the clarity on that. My second question is on the Eden BioCell venture. In the prepared remarks you mentioned that the GMP facility in China is almost complete. I am just wondering what are the next steps planned for that program?

Yes, so, thanks very much. So, it’s just remarkable what can be accomplished in Greater China. We visited at the beginning of the year and then just a few short months later, it’s gone from a work in progress to work that has really now maturity. People have been hired, infrastructure is established, GMP is coming online. This now enables us with our partner Eden BioCell to essentially begin the regulatory process to get the CAR-T trial going. So that’s where we are with them. It’s technology transfer from them. And they are hailing what we’ve learned and they are getting ready to execute on that trial for Greater China.

I see. And that’s all I have. Thank you again for taking my questions.

Thanks, Sean.

Thanks very much. So, just as a summary and closing from me, this has been an amazing last few months for us. I just thank my team for all the incredible hard work and for the support of our investors and our patients on our trial. So, thank you very much everyone.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.